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Friday, August 31, 2012

Car buying to get costlier soon, thanks to new uniform MVT

If you are planning to buy small cars like Maruti Alto, Tata Nano or the new Maruti 800 this Diwali, you end up paying more despite of the festive season offers in place then. The reason behind this is that the Punjab could charge the motor vehicle tax (MVT) at a higher rate than the prevailing rate. It is said that the state government is all set to increase the MVT from 2 percent and 4 percent to a flat 6 percent for all cars. Following this, the small cars that were charged at 2 percent will now be paying whooping 6 percent. This means that the small car buyers will at the greatest loss while the luxury car makers were already paying 4 percent MVT and the increase will be just an increase.

Sources said that the fresh decision by the Punjab government is in the light of the dumping of the slab system of MVT and the flat 6 percent MVT has been laid down for all cars big or small. The new tax will also be applicable on two wheelers. Thus the real sufferers will not only be car buyers but also two wheeler buyers as well. It is believed that if one wishes to buy Tata Nano one has to pay more on registration charges as the rate if now 6 percent and not 2 percent for small cars.

As per the old system of tax, cars with a price tax upto Rs 5 lakh were charged at 2 percent and cars ranging from Rs 5 lakh to Rs 10 were charged 4 percent and from Rs 10 lakh to Rs 20 lakh the MVT was 6 percent. While for cars priced more than Rs 20 lakh, it was 8 percent. Thus it is sure that buying Ford Endeavour or Honda Accord will be less costly than buying a small car such as Chevrolet Beat Diesel or Hyundai Eon. The new tax system seems to be more discriminative than the earlier one and sincere opposition is expected to be underway.